Soft Second Mortgage Program Returns to New Orleans

A city program that helps first-time homebuyers purchase affordable homes has received an additional $3.2 million in grant funding.

The funding will be used to make so-called “soft-second” mortgage subsidies up to $35,000 to New Orleans families of modest means who qualify for a first mortgage and have completed a homeownership training course. Qualified buyers can also get up to $5,000 to assist with closing costs.

The city’s Office of Community Development announced the funds Tuesday (March 11), noting the money was secured through a federal Community Development Block Grant. The money is available to homebuyers starting Tuesday.

The city will offer soft-second mortgages and closing-cost subsidies until the funding runs out. Marjorianna Willman, director of the city’s Office of Community Development, said there were already homebuyers applying for funds as of Wednesday morning. She expects the funding will go quickly, but encouraged all interested to apply as soon as possible, even if they’re still trying to determine if they qualify.

“Do not assume that the money is all gone,” Willman said.

Soft-second mortgages are used to bridge the gap between what low-income families can afford to buy and the cost of buying a home in the city. A soft-second mortgage starts as a no-interest loan, but can be forgiven if a family stays in their home and remains current on loan payments. The lower a family’s income, the larger the loan is.

Willman noted many families have income to make loan payments, but need a little assistance to “make it across the threshold” and secure a loan.

“They do not have the down payments, but they do have jobs,” Willman said.

The soft-second program started in 2007 with $75 million taken from a failed state program that sought to subsidize rental property renovations. The last of the $75 million was used in 2018, Willman said.

After Hurricane Katrina, it focused on helping families cope with the steep cost of rehabilitating damaged or blighted homes. Today, the program is seen as key tool in keeping housing affordable for working-class families who would otherwise be pushed out of the city’s core by rising home prices. In a statement, Willman described the program as “just one of the tools” Mayor LaToya Cantrell’s administration is using “to combat the affordable-housing crisis.”

Willman said the city continues to search for sources to continue to fund the soft-second program, as well as other “creative” solutions to open access to homeownership.

“We know the need is there,” Willman said.

The $3 million announced Tuesday is available to first-time homebuyers who earn less than 80 percent of the area median income. That 80 percent threshold is roughly $36,750 a year for a single person, and $52,500 a year for a four-person family, according to federal estimates for the New Orleans area. Families with lower incomes qualify for a larger forgivable loan.

In addition, the homebuyer must be approved for a first mortgage from a lender approved by the city. Here’s the list of approved lenders for 2019.

Homebuyers must also complete a homeownership training course by an approved agency. Here is a list of certified training agencies.

For more information on the city’s soft-second mortgage program contact Taymia Muse at 504-658-4243, Lindsay Smith at 504-658-4244 or Tonya Bernard at 504-658-4245.

Original article found at: https://www.nola.com/business/2019/03/new-orleans-gets-3-million-to-help-first-time-homebuyers-secure-loans.html

It’s basically free money for low-income homebuyers

Good news for aspiring homeowners: New Orleans has relaunched its soft second mortgage program. If you’re a first-time homebuyer with low to moderate income, this is free money that you can put toward purchasing a house.

To qualify, you have to earn less than 80 percent of the area median income. That’s $36,750 for a single-person household and $65,600 for a four-person household—see where you fall on this chart to find out if you qualify. Next, you must complete home ownership training by an approved agency. Finally, you must qualify for a mortgage from one of these lenders.

If you meet all these requirements, you could receive up to $35,000 in soft second funds and up to $5,000 in closing cost assistance. A soft second mortgage doesn’t accumulate interest and doesn’t have to repaid as long as you live in your house for a certain amount of time—in this case, 10 years.

“The soft second mortgage program is just one of the tools being used to combat the affordable housing crisis,” said direct of the office of community development Marjorianna Willman in a statement. “The Cantrell administration recognizes the many benefits of home ownership for the people of New Orleans. Many just need just a little bit of assistance to make it across the threshold.”

The funding comes from a $3 million Community Development Block Grant fund, but when that money is gone, it’s gone. So definitely take advantage of this opportunity while you can.

Original article found at: https://nola.curbed.com/2019/3/12/18261807/soft-second-mortgage-program-returns-to-new-orleans-2019